Housing

The so-called ‘miracle cure’ solution gives people homes when they need them without conditions attached, and has brought down homelessness by 70 per cent in Finland and eradicated poverty-based homelessness completely.

Burnham has worked tirelessly to bring homeless numbers down since he was first elected in 2017, and has even been donating 15 per cent of his salary to a homeless charity every month he’s been in the job.

Now, after a successful pilot of a similar housing first scheme in Greater Manchester, which has supported 430 people with complex experiences of homelessness, Burnham is bidding for government funding to extend it beyond the current deadline of March 2025.

“I kept hearing people talking about Finland and housing first, so I just thought, well, I better get over there and have a look. So I went, and it was sort of life-changing, actually”, the Manchester Mayor said when he was first elected.

He has since worked hard to PR the initiatives to the public, saying it financially makes sense.

“It actually saves public money to do this,” he said. “It’s not as if we’re just asking for something, and it’s another pressure. The bigger you do housing first, the more you’ll save.”

Key points

• Poor building quality, conditions and environmental performance is prevalent in Australia’s housing stock. In a large, national survey in 2022, 70 per cent of households reported one or more major building problems.
• The ability to accurately measure and monitor the characteristics of the housing stock as a whole has never been greater. The current national data infrastructure is insufficient.
• Australian policy that deals with housing standards is fragmented across federal and state and territory governments, and portfolios. When compared to international benchmarks, it is weak and overly reliant on voluntary measures.
• A national strategy to improve housing standards should be developed. Short-term, considerable opportunities exist to enhance housing standards via mandatory disclosure of performance at point of sale or lease, minimum standards in the rental sector and stronger performance requirements for new houses.
• Policy action will have to balance lobbyist resistance. Lessons from two case studies show that change is possible but requires mobilisation of a strong narrative by advocates.

In 1994, the ten largest builders had just 10% of the national market. By 2018, the top ten builders had a little less than a third. Partly this consolidation is due to a credit crunch. During the financial crisis from 2007-2012, 55% of residential developers disappeared. There were also post-crisis mergers, like Pulte Homes and Centex, Lennar and CalAtlantic, Tri Pointe and Weyerhauser, and so forth, but many of the acquisitions these days are smaller roll-ups, like D.R. Horton buying an Arkansas specialty builder Riggins Custom Homes, Gulf Coast builder Truland Homes, or lot developer Forestar Group, or Lennar acquiring developer WCI Communities. Analysts are projecting 2024 to be another strong year for M&A.

Of course, such numbers understate consolidation; national shares matter very little, since housing is local, and concentration is higher when you get to local levels. In Miami-Fort Lauderdale, for instance, Lennar has 47% of the market for new homes, in Los Angeles, D.R. Horton has about a third. As economist Luis Quintero noted in a paper, 60% of local markets are now “highly concentrated,” a new phenomenon. In 25 of the top 82 markets, one builder controls at least 25% of the market. That’s 60% of the housing markets in “Virginia, Maryland, Delaware, New Jersey, New York, and western Pennsylvania.”

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So why all the consolidation? And more importantly, why hasn’t the number of builders bounced back? If margins are up, why aren’t there new entrants coming in to take profit and share? To answer this question I started by reading a bunch of investor documents from the big homebuilders. And I realized that to call these businesses “homebuilders” is misleading. It’s striking how little of their business has to do with, well, building. For instance, here’s D.R. Horton in 2023: “Substantially all of our land development and home construction work is performed by subcontractors.” Here’s Lennar in 2023: “We use independent subcontractors for most aspects of land development and home construction.” I suspect most of the other big guys would say something similar. These aren’t builders, they are financiers that borrow cheaper than real developers and use that cheap credit to speculate in land, hiring contractors to do the work. They are, in other words, middlemen.

Local homebuilding markets have become highly concentrated in the past decade. We document this increase in concentration and use IV regressions to show that it has led to lower production volume, fewer units in the production pipeline, and greater unit price volatility. These results are consistent with a theoretical model in which oligopolistic firms strategically set the timing, volume, and price of their new construction. Our estimates imply that market concentration has decreased the annual value of housing production nationwide by $106 billion. These findings provide further evidence that the secular decline in competitive intensity is altering macroeconomic dynamics .

In the US, housing policy distinctively subsidizes homeownership. Most notably in the form of the Mortgage Interest Tax Deduction, federal policy benefits owners much more than tenants. Climate policy is no different. In public or cooperative housing models, the government or cooperative serves as the landlord or property manager, and therefore has more direct influence over the fate of property conditions. In much of the private market, by contrast—which is where the vast majority of tenants find housing—the federal government sees its role as less direct. Tenants in many multifamily properties have no direct method of contracting for services; many do not know who owns the real estate. The IRA’s focus on incentives and credits for landlords maintains this property relationship.

The fact that about one in three housing units are occupied by tenants raises questions about the effects such climate tax incentives will have on owners of rental property. The Biden Administration has emphasized the importance of channeling these funds to “disadvantaged communities,” maintaining that about 40 percent of funds should go toward low-income households, 10 percent of which should go toward multi-family households. However, the facts of ownership leave open a stubborn question: will landlord spending on climate retrofits—a condition for receiving public funds—alter existing financial terms between tenants and landlords?

In this report we propose the creation of a national construction fund to help expand the stock of new multifamily housing, particularly during high interest rate environments. The multifamily housing sector finds itself trapped in a vicious cycle: rising rent and housing costs induce the Federal Reserve to raise interest rates, thereby shrinking the supply of financing for housing, in turn contributing to higher housing prices. Financing bottlenecks cause otherwise economically viable units to sit unbuilt or delayed, contributing to our national housing shortage and affordability crisis. 

A national construction fund would provide enough lower-cost construction financing to allow multi-family developers to clear upfront equity investment hurdles and continue developing projects in higher interest rate environments. Thousands of permitted, ready-to-build units that are stuck in limbo would nally enter construction, ensuring that housing supply becomes available as the economy picks up steam and preventing housing costs from continuing to spiral upward.

This report highlights:

• the connection between the business cycle, housing supply, and housing costs;
• the financing gaps that developers face in high-rate environments; and
• considerations and options for policymakers in designing and implementing a national construction fund that can ll those gaps, including the proper instrumentalities to host the fund, eligible lenders, risk management, fund sizing, and further incentives to increase affordability.

The federal government has not made a large scale investment to address affordable housing shortages since Franklin D. Roosevelt’s New Deal, which created public housing for civilians. Now, we need action beyond that scale. The country’s housing crisis is untenable, and it must end. We need a Homes Guarantee that will:

• Build 12 million social housing units and eradicate homelessness;
• Reinvest in existing public housing;
• Protect renters and bank tenants;
• Pay reparations for centuries of racist housing policies; and,
• End land/real estate speculation and de-commodify housing.

Fully realized, this proposal will guarantee homes for all. Rents will be set based on tenants’ needs and real costs to
local government, rather than speculative market prices. Land will be stewarded by and on behalf of everyday people
instead of financialized by developers and landlords. A Homes Guarantee will offer both reparative and proactive
approaches, including restorative justice to communities impacted by decades of discriminatory housing policy, as
well as investments that slash carbon emissions and support resiliency from ongoing climate breakdown.

Offering a plan to eradicate housing insecurity and homelessness in America is a gigantic undertaking. It is also a
moral and political responsibility. This briefing book is our detailed proposal for a Homes Guarantee

By returning income inequality to the levels found in 1970, the United States could reduce the rate of extreme house poverty sixfold, and cut the rate of extreme rent poverty eleven-fold.

These numbers are so large that they sound magical. But that’s the thing about returning stolen money. It’s a concrete action that, as if by magic, makes people less poor. And when folks are less poor, they can better afford housing.

Sarcasm aside, my point is that the unfolding housing crisis is a catastrophe of poverty that can be solved by reducing inequality. Take money from the rich and hand it to the poor, and the housing crisis will solve itself. And let’s not call this policy ‘socialism’. Let’s call it a return to the ‘Great Society’ (the inverse of MAGA).

To be fair, boldly redistributing income is a big ask that’s unlikely to happen in the short term. Which is why anti-poverty groups are wise to lobby for the smaller ask of subsidized housing. That said, subsidizing rent is like handing food stamps to the victims of theft. It’s less bad than doing nothing. But if we want to eliminate rising rent poverty, there is a better solution. Give back to the American poor the money that was stolen from them.

The notion that negative gearing leads to an increased supply of rental dwellings is flawed: 92% of
investment is used to purchase existing dwellings, displacing previous owner-occupiers or tenants to
buy or rent elsewhere, respectively, resulting in little to no net increase in the rental stock. Negative
gearing is a poor investment strategy over the long term for investors pursuing capital gain rather
than rental income as housing prices have increased by an average of 2.4% annually from 1880 to
2011 in real terms (before 1996, housing had delivered a real return of only 0.7% annually). Negative
gearing for purposes of realizing capital gain, however, becomes a viable strategy during the boom
phase of a housing cycle as capital values are substantially appreciating. Contrary to claims that
quarantining negative gearing during 1985-87 caused a surge in rental prices, rents increased in only
some capital cities while stagnating or falling in others.

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It is recommended that, at a minimum, negative gearing be quarantined to the purchase of newly-
constructed dwellings, or preferably, be abolished. The Commonwealth Rent Assistance (CRA) scheme
is better targeted towards those who require help in the course of renting rather than subsidising
residential property market investors. Although the CRA could increase rents, it appears to be the
most straight-forward mechanism available to policymakers to aid tenants.

Commonwealth Government engagement in housing was very limited until the war of 1939-45 when the conditions were ripe for its leadership. Reviewing the nation’s social security system, Parliament concluded that housing was important in achieving a fairer society.

The Commonwealth Housing Commission (CHC) in the letter of transmittal accompanying its final report said:

"We consider that a dwelling of good standard and equipment is not only the need but the right of every citizen – whether the dwelling is to be rented or purchased, no tenant or purchaser should be exploited for excessive profit (Emphasis in original) CHC 25 August 1944)"

The CHC statement summarised the aspirations that had energised housing reformers as they responded to the privations of the previous half century. The Commonwealth’s development of a public housing program was seen as a way of giving effect to the CHC’s assertion.

This paper charts the departure from that lofty ambition since 1945 revealed as a series of episodes around the periodic Commonwealth State Housing Agreements (CSHAs) from 1945 to 2000.

Slum clearance and rehousing the displaced population was another important subject during the late Depression years. The identification of flats, terraces, and tenements, particularly in the inner city, as slums irrespective of how sound they were as housing stock was as much a moral judgment as a functional one. The claim that overcrowding in the slums would lead inevitably to alcoholism, crime and indecency, suggested that “morality is a question of square feet” (Spearritt 1974:65).

The Commonwealth proposed to create a public housing program under which households would be able to rent housing from a State housing authority as a matter of choice but low income households were expected to be a significant proportion of tenants. The original CSHA provided for the sale of houses although that the proportion would initially be very low.